Topic : 3

Enterprise Resource Planning

(ERP) Systems
 What is ERP?

• An ERP system is an attempt to integrate all

functions across a company to a single
computer system that can serve all those
functions’ specific needs.
• “Integration” is the key word for ERP
implementation.
What is ERP?
Major Reasons for Adopting ERP

• It has Integrate financial information

• It Integrates customer order information
• Standardize and speed up operations
processes
• Reduce inventory Management system
• Standardize Human Resources information
 Potential Benefits of ERP
• Internal Benefits
– Integration of a single source of data
– Common data definition
– A real-time system
– Increased productivity
– Reduced operating costs
– Improved internal communication
– Foundation for future improvement
 Potential Benefits of ERP

• External Benefits
– Improved customer service and order fulfillment
– Improved communication with suppliers and
customers
– Enhanced competitive position
– Increased sales and profits
 ERP Implementation Approaches

• The big bang – install a single ERP system

across the entire organization
• Franchising – Independent ERP systems are
installed in different units linked by common
processes, e.g., bookkeeping.
• Slam dunk – install one or several ERP modules
for phased implementation of key business
processes.
 Major Challenges to ERP Implementation

• Flexibility of software system upgrades

• Implementation timelines
• Availability of internal technical knowledge
and resources
• Education and training
• Implementation strategy and execution
• Resistance to change
 ERP Implementation - Key Enablers
• The organization is prepared for the change.
• The executive leaders are active and visible in their
support.
• The initiative is seen as a business imperative by the
organization.
• The resources are available to conduct the project
completely.
• A good packaged system is used and not customized.
• The user group is trained to use the software before it is
implemented.
 ERP Implementation Practices
• Change Management
– Redesigned jobs call for higher levels of skills and
accountability
– Change management is viewed as more than just
increased training and communication
– Enterprise-wide systems drive redesigned changes.
– The executive sponsor is the change agent.
– Resistance from the work force (including
management) is the most significant obstacle.